Africa noted a significant shortage of foreign direct investments (FDIs) in 2022, but many nations, most notably Morocco, might witness a notable growth in 2023.
According to the UN Conference on Trade and Development’s (UNCTAD) World Investment Report 2022, FDI to African countries reached a record $83 billion in 2021, marking a significant recovery from a downturn brought on by COVID-19.
FDI information and monitoring portal ‘Investment Monitor’ (IM) noted that this was more than twice as much as the amount recorded in 2020.
Nevertheless, despite the continent seeing strong development in 2021, just 5.2% of global FDI, up from 4.1% in 2020, went to Africa.
While FDI increased moderately across most of Africa in 2021, one intra-firm financial transaction in South Africa accounted for nearly 45% of the total, explained IM.
Furthermore, although the official FDI statistics for 2022 are not available yet, experts say that anecdotal evidence indicates that inflows during 2022 were weaker than in 2021 in the wake of the deteriorating global economic environment and security situation, declared IM.
Investment in clean energy is heavily concentrated in just a few markets in Africa. With a combined $46 billion, South Africa, Egypt, Morocco, and Kenya have contributed nearly three-quarters of all renewable energy assets since 2010. Only $16 billion has been secured throughout that time by all other African nations.
According to IM, Africa’s green and blue economies could attract huge investments.
“The number of international projects in renewables in Africa climbed to 71 in 2021, including a $20bn project to provide solar and wind energy from Morocco to the UK via 3,800m of subsea cables,” reads IM’s analysis.
It’s important to note that in 2021, investment in Morocco increased by 52% to $2.2 billion.
As for the first 11 months of 2022, it reached $2.3 billion, according to the foreign exchange office.
Now, European investors are starting to look into Africa more closely, which could attract more direct investments.
The African region has a huge potential to draw more FDI, lead by the mining and gas sectors but that could have to wait until the world economy starts to recover with the post-Covid-19 repercussions slowing down in 2023
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